To implement the macro
adjustment policies provided for in the Integrated Working Plan of the State
Council for Energy Conservation and Emission Reduction during the 12th
Five-year Period and the Comments of the State Council on Strengthening
Environmental Protection Priorities, and to follow the requirements of
matching supervisory policies with industrial policies, the CBRC has formulated
the Green Credit Guidelines for the purpose of encouraging banking
institutions to, by focusing on green credit, actively adjust credit structure,
effectively fend off environmental and social risks, better serve the real
economy, and boost the transformation of economic growth mode and adjustment of
economic structure. The Guidelines are hereby printed and issued for
implementation.

Banking supervisory
authorities should forward the Notice to local banking institutions and
urge them into implementation.

Feb. 24, 2012

The China Banking Regulatory Commission

Green
Credit Guidelines

Chapter 1 General Provisions

Article 1 For the purpose of encouraging
banking institutions to develop green credit, these Guidelines are
formulated pursuant to the Law of the People's Republic of China on Banking
Regulation and Supervision and the Law of the People's Republic of China
on Commercial Banks.

Article 3 Banking institutions shall promote
green credit from a strategic height, increase the support to green, low-carbon
and recycling economy, fend off environmental and social risks, and improve
their own environmental and social performance, thus optimizing their credit
structure, improving the quality of services, and facilitating the
transformation of development mode.

The environmental and social risks mentioned
herein refer to the hazards and risks on the environment and society that may
be brought about by the construction, production and operating activities of
banking institutions’ clients and key affiliated parties thereof, including environmental
and social issues related to energy consumption, pollution, land, health,
safety, resettlement of people, ecological protection, climate change, etc.

Article 5 The CBRC is responsible for, in
accordance with applicable laws, regulating and supervising banking
institutions’ green credit business and their environmental and social risk
management.

Chapter 2 Organization and Management

Article 6 The board of directors or supervisory
board of a banking institution shall build and promote green credit concepts
concerning energy saving, environmental protection and sustainable development,
be committed to giving play to the functions of facilitating holistic,
coordinated and sustainable economic and social development, and establish a
sustainable development model that will benefit the society at the same time.

Article 7 The board of directors or supervisory
board of a banking institution is responsible for developing green credit
development strategy, approving the green credit objectives developed by and
the green credit report submitted by senior management, and monitoring and
assessing the implementation of green credit development strategy.

Article 8 The senior management of a banking
institution shall, pursuant to the resolutions of the board of directors or
supervisory board, develop the green credit objectives, have in place relevant
mechanisms and processes, define clearly the roles and responsibilities,
conduct internal checks and appraisal, annually provide report to the board of
directors or supervisory board on the development of green credit, and timely
submit relevant reports to competent supervisory authorities.

Article 9 The senior management of a banking
institution shall assign a senior officer and a department and configure them with
necessary resources to organize and manage green credit activities. Where
necessary, a cross-departmental green credit committee can be set up to
coordinate relevant activities.

Chapter 3 Policy, System and CapacityBuilding

Article 10 Banking institutions shall, as per
national environmental protection laws and regulations, industrial policies, sector
entry policies, and other applicable regulations, establish and constantly
improve the policies, systems and processes for environmental and social risk
management and identify the directions and priority areas for green credit
support. As for industries falling within the national "restricted"
category and industries associated with major environmental and social risks,
they shall customize credit granting guidelines, adopt differentiated and
dynamic credit granting policies, and implement the risk exposure management
system.

Banking institutions shall prepare a list of
clients currently faced with major environmental and social risks, and require
these clients to take risk mitigation actions, including developing and having
in place major risk response plans, establishing sufficient, effective
stakeholder communication mechanisms, and finding a third party to share such
risks.

Article 13 Banking institutions shall give
priority to their own environmental and social performance, set up appropriate
systems, step up the publicity and education on green credit concepts,
standardize their operational behaviors, promote green office, and improve the
level of intensive management.

Article 15 Banking institutions shall strengthen
due diligence in credit granting. The scope of due diligence on environmental
and social risks shall be defined according to the characteristics of the
sector and region in which the client and its project is located, so as to
ensure the due diligence is complete, thorough and detailed. Where necessary,
the banking institutions can seek for support from an eligible, independent
third party and competent authorities.

Article 16 Banking institutions shall examine
the compliance of clients to whom credit will be granted. As for environmental
and social performance, compliance checklist and compliance risk checklist
shall be developed according to the characteristics of different sectors, so as
to ensure compliance, effectiveness and completeness of the documents submitted
by the clients, and make sure they have paid enough attention to related risk
points, performed effective dynamic control, and satisfied the requirements on
substantial compliance.

Article 17 Banking institutions shall strengthen
credit approval management, and define reasonable level of credit granting authority
and approval process according to the nature and severity of environmental and
social risks faced by the clients. Credits may not be granted to clients whose
environmental and social performance fails to meet compliance requirements.

Article 18 Banking institutions shall, by
improving contract clauses, urge their clients to strengthen environmental and
social risk management. As for clients involving major environmental and social
risks, the contract shall provide for clauses that require them to submit
environmental and social risk report, state and avow that they will strengthen
environmental and social risk management, and promise that they are willing to
be supervised by the lender; the contract shall also provide for clauses
concerning the remedies banking institutions can resort to in the event of
default on environmental and social risks made by the clients.

Article 19 Banking institutions shall enhance
credit funds disbursement management, and consider appropriation management, and
regard how well clients have managed environmental and social risks as important
basis for credit funds appropriation. As for projects to which credit is
granted, all stages, including design, preparation, construction, completion,
operation and shutdown shall be subjected to environmental and social risk
assessment. Where major risks or hazards are identified, credit funds
appropriation can be suspended or even terminated.

Article 20 Banking institutions shall strengthen
post-loan management. As for clients involving potential major environmental
and social risks, relevant and pertinent post-loan management actions shall be
developed and implemented. They shall watch closely the impact of national
policies on the clients’ operation, step up dynamic analysis, and make timely
adjustment to asset risk classification, reserve provisioning and loss
write-off. They shall establish and improve internal reporting system and
accountability system concerning major environmental and social risks faced by
the clients. Where major environmental or social risk event occurs to the
client, the banking institution concerned shall timely take relevant risk
responses and report to competent supervisory authorities on potential impact
of said event on itself.

Article 21 Banking institutions shall strengthen
the environmental and social risk management for overseas projects to which
credit will be granted and make sure project sponsors abide by applicable laws
and regulations on environmental protection, land, health, safety, etc. of the
country or jurisdiction where the project is located. The banking institutions
shall make promise in public that appropriate international practices or
international norms will be followed as far as such overseas projects are
concerned, so as to ensure alignment with good international practices.

Chapter 5 Internal Controls and
Information Disclosure

Article 22 Banking institutions shall
incorporate green credit implementation into the scope of internal compliance
examination, and regularly organize and carry out internal auditing on green
credit. Where major deficiencies are identified, investigation shall be
conducted to determine whom to be held accountable as per applicable
regulations.

Article 23 Banking institutions shall establish
effective green credit appraisal and evaluation system and reward and penalty
system, and have in place incentive and disciplinary measures, so as to ensure
sustained and effective offering of green credit.

Article 24 Banking institutions shall make
public their green credit strategies and policies, and fully disclose
developments of their green credit business. As for credit involving major
environmental and social risks, the banking institutions shall disclose
relevant information according to laws and regulations, and be subjected to the
oversight by the market and stakeholders. Where necessary, an eligible,
independent third party can be hired to assess or audit the activities of
banking institutions in performing their environmental and social responsibilities.

Banking institutions shall, pursuant to the
provisions hereof, perform overall green credit evaluation at least once every
two year, and submit the self-evaluation report to competent banking
supervisory authorities.

Article 27 When
organizing and conducting on-site examination, banking supervisory authorities shall
take into full account the environmental and social risks faced by banking
institutions, and make clear the scope and requirements of examination. As for
regions or banking institutions involving prominent environmental and social
risks, ad hoc examination shall be conducted and urge said institutions to improve
in light of examination results.

Article 28 Banking supervisory authorities shall
provide more guidance to banking institutions on green credit self-evaluation,
and, in conjunction with the results of off-site surveillance and on-site
examination, holistically assess the green credit performance of banking
institutions, and treat the assessment results, as per applicable laws and
regulations, as important basis for supervisory rating, institution licensing,
business licensing, and senior officer performance evaluation.

Chapter 7 Supplementary Provisions

Article 29 These Guidelines become
effective as of the date of promulgation. Village banks, lending firms, rural
mutual cooperatives and non-banking financial institutions shall enforce
actions in reference to these Guidelines.

Article 30 These Guidelines are subject
to interpretations by the CBRC.